LINK: http://autos.msn.com/advice/article.aspx?contentid=4024279
New Ford Cars selling not so well. Due to gas prices and high taxes. Car dealers have no choice but to lower the cost of new cars. This means that new cars can be sold for as little as $25,000 USD.
Im talking about a full size SUV for that little amount. So what do you think? Does decreasing prices seen reasonable in order to sell cars. What happens if the sold price continues to decline does the profit margin decrease as well? of course! If gas prices continue to increase and car prices continue to decrease, there will be a point when the profit margin is so little that its not worth producing cars anymore. In fact, if the cost of production is more than that of the profit. I think that car makers will begin to shut down. And if this theory works, it would be a way for the government to close down manufacturers and initiate new initiatives for creating environmentally friendly cars.
This link mainly talks about things we talked about in class of chapter 2, where the demand of a product reaches all time high. Everyone wants gas, and for as little as possible. But because resource is scarce, hence "scarcity", prices for those resource will rise.
The link also talks about how these new features are added to make the cars sell better. Does this technique work from an economical stand point? It does, because people are attracted to the exclusive features and thus are urged to buy those luxury vehicles. But the down side is the expenses put into gasing it up.
If people didn't want to go on vacations and get rides to school every morning, then gas prices will drop. As we learned, when the supply is limited, or is controled, the prices for the supply will rise if demand increases. But if the supply of gas is not controled where the public can exploit all the oil reserves, then the price of gas would drop, because supply has increased. Economics is all about the balance of things. Like newtons law, for every action, there is an equal and opposite reaction. The price of gas for the economy is the equalibrium balance between quantity and price.
Junner.Z
2 comments:
Hey! I think you made a good connection here. It's true to see how the gas prices increase everyday. Well, if cars don't decrease their price, I don't think people will still willing to buy cars. Even though there's cars that use solar energy or other resources but are they as good as the cars that use gas to run? Ex. Smart Car, etc.
Makes me want to buy a car now and let it sit there till gas prices go down. haha. I guess the dealers have no other choice but to lower their prices. I mean, they can't just let the cars sit there and rust. Selling SUVs and the such are a particularly bad type of car to be selling right now, since big cars eat up the most gas.They could, however, probably profit off selling small cars that are easy on the gas. Well, once gas prices go down (which they are starting to) the price of cars can go back up.
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